Ruttle Plant Hire Ltd v The secretary of state for environment, food and Rural Affairs

Where a contract provides that labour time runs from leaving the depot until returning to it, that wording may include travelling time, working time and meal breaks. An industry custom that meal breaks are unpaid will not displace a clear express term.

Plant hire rates may become contractual when rates notified under an agreement are not challenged within a reasonable time and the parties continue to perform. References to industry schedules may support notified rates without incorporating every provision in those schedules. A clause providing seven days’ notice to terminate an indeterminate hire contract need not govern the removal of individual plant during a continuing contract, but reasonable notice may be implied for that purpose.

Usage or custom can imply a contractual term only where it is sufficiently certain, notorious, reasonable and consistent with the express contract.

During an outbreak of classical swine fever, the Ministry of Agriculture, Fisheries and Food engaged Ruttle Plant Hire Limited to provide labour and plant. The contractual arrangements were made urgently and included labour terms, CPA conditions and references to FCEC plant rates.

After MAFF paid substantial sums, Ruttle claimed a further balance from DEFRA, its successor, while DEFRA counterclaimed for alleged overpayment. The court tried preliminary issues concerning meal breaks, an administration charge, working foremen, plant rates, incorporation and effect of FCEC and CPA provisions, vehicles, idle plant, materials and interest.

The central questions were what terms had been agreed or implied and how the parties’ subsequent conduct affected the contractual account.

1. Meal breaks. The men took one half-hour meal break each day. The chargeable-time clause, providing for payment from leaving the depot until returning, expressly covered travelling time, working time and meal-break time. Industry practice that meal breaks were unpaid could not displace that express term. Issue 2 was answered no.
2. Administration and foremen. No implied variation entitled Ruttle to a percentage administration charge. The term was neither necessary for business efficacy nor an obvious inference, and MAFF had objected to the charge. Mr G Ruttle was a working foreman, but Mr Garrow, Mr Bell and Mr Carrol performed managerial rather than working-foreman functions. Their costs formed part of Ruttle’s overheads.
3. Plant rates. The parties agreed in principle that FCEC rates would apply and that precise rates would be notified. The rates notified on 21 August 2000 became contractual when MAFF did not object and continued to call off plant. The full rates notified on 31 August likewise became agreed rates in early September. The 35 per cent reduction concerned interim cash-flow payments only.
4. FCEC clause 1A. References to FCEC schedules supported the notified rates but did not incorporate the schedules’ whole notes. In any event, “where plant is hired in” referred to plant obtained from an external organisation, not internal hiring between closely linked Ruttle companies.
5. CPA clause 24 and idle plant. Clause 24 governed termination of the contract as a whole. It did not prescribe the removal of individual items during a continuing contract. An implied term required reasonable notice, assessed as seven days in the circumstances. Plant remained on hire, at the full contractual rate, unless MAFF gave seven days’ notice that it was to come off hire. Internal records or a bare removal instruction were insufficient.
6. Christmas holiday and materials. Industry practice was not sufficiently certain and invariable to imply a holiday standby term. Plant therefore remained chargeable at the full rate. Category (a) items were consumables; other items were chargeable according to the contractual provisions and whether MAFF had requested their purchase or work. Repairs and losses were governed by CPA clauses 9 and 13.
7. Interest. Under section 5 of the Late Payment of Commercial Debts (Interest) Act 1998, justice did not require remission or reduction of interest. Ruttle had reasonably prioritised related FMD litigation and could not be expected to employ additional staff merely to pursue an unpaid debt. DEFRA was liable for interest at the prescribed rate.